NatWest CC paid in full, still charged interest

Sir_Robert

I've used my NatWest credit card for years as my main way to spend, before paying it off in full at the end of the month. This works for me as I have quite a lot of expenses for work (flights, etc) and this allows me to claim money back before having to pay for it via the credit card bill.

More recently, I've sometimes not quite paid it in full, where it will mean I am overdrawn. In simple terms, interest for my current account overdraft is 30% plus a charge, whereas interest on the credit card is 23%. This seemed a fairly rational way to manage my finances and I thought no more of it until now.

The last couple of months have been pretty expensive, with lots of travelling for work and last month I bought a new car, but at the start of April I paid off my credit card in full. I was then massively surprised to find I had two charges on this months bill, one for £1.35 and another for over £100.

Looking in my terms and conditions, it seems that if the credit card is not paid in full, not only will interest be paid on the outstanding credit but also on the full balance of the following month. I'm absolutely seething, as this seems a fundamental change to how the credit card has operated and is frankly unfair/dishonest. So my question, before I tell NatWest to stick their credit card where the sun doesn't shine, is whether this is a standard term now or just one that is particular to NatWest?

Thanks in advance for any help.

Stevie_Palimo

It does not make sense if the card is paid in full then no charges can be applied to it.

PeacefulWaters

If you don't clear the balance in full you pay interest from the date of transaction (or the date it appears on your statement).

If you then clear the balance in full the next month you will still have trailing interest on those amounts you didn't originally clear in full.

Clear the balance in full two months running and the "norm" will be restored.

I've held credit cards for thirty years. This is normal and nothing unreasonable has been done by your card company. You should see the interest free period as a generous perk that is lost if you don't pay in full.

Sir_Robert

That's what I thought, but according to the person I spoke to you need two clear months of full payment to 'earn' the interest-free period of 56 days.

In the previous month I had left an outstanding balance of £85 (on a total spend of £1800). Last month I paid a bill of £3000 in full. But my most recent bill which is for £6000 (the car) includes a charge for the interest on this bill.

I'm livid and have put a complaint in to NatWest. The call handler offered to reduce my apr, but couldn't remove the charge. When I suggested I would close my account and go elsewhere, she told me it was an industry standard approach. Interested to know if this is the case and if anyone else has encountered it?

PeacefulWaters

Sir_Robert wrote: »

That's what I thought, but according to the person I spoke to you need two clear months of full payment to 'earn' the interest-free period of 56 days.

In the previous month I had left an outstanding balance of £85 (on a total spend of £1800). Last month I paid a bill of £3000 in full. But my most recent bill which is for £6000 (the car) includes a charge for the interest on this bill.

I'm livid and have put a complaint in to NatWest. The call handler offered to reduce my apr, but couldn't remove the charge. When I suggested I would close my account and go elsewhere, she told me it was an industry standard approach. Interested to know if this is the case and if anyone else has encountered it?

It's how all the credit cards I've ever had have worked. Type "trailing interest" into the search above and you'll find several threads.

Nat West have done nothing wrong. You've just misunderstood how a credit card works in these circumstances.

Sir_Robert

PeacefulWaters wrote: »

If you don't clear the balance in full you pay interest from the date of transaction (or the date it appears on your statement).

If you then clear the balance in full the next month you will still have trailing interest on those amounts you didn't originally clear in full.

Clear the balance in full two months running and the "norm" will be restored.

I've held credit cards for thirty years. This is normal and nothing unreasonable has been done by your card company. You should see the interest free period as a generous perk that is lost if you don't pay in full.

Clearly I didn't understand how it works, so I appreciate that you have clarified that. I guess the lesson being always pay the credit card in full.

[Deleted User]

It's industry standard.

You are charged interest on a daily basis on the money you've borrowed. When you received your last statement, you were told how much interest you needed to pay up to the date the statement was produced.

You then paid that statement in full, but interest continued to be charged on a daily basis until they received your payment. This appears on the following statement.

If you clear that statement in full, no more interest will be charged if you continue to pay in full.

There's nothing devious or underhand. It's simply interest charged on borrowing money.

PeacefulWaters

Sir_Robert wrote: »

Clearly I didn't understand how it works, so I appreciate that you have clarified that. I guess the lesson being always pay the credit card in full.

That is absolutely the best way forwards.

You were particularly unfortunate that the size of the bill and the balance left unpaid were so far apart.

Sir_Robert

PeacefulWaters wrote: »

It's how all the credit cards I've ever had have worked. Type "trailing interest" into the search above and you'll find several threads.

Nat West have done nothing wrong. You've just misunderstood how a credit card works in these circumstances.

You learn something everyday. I wonder how many other people were unaware of this?

I guess it's only because of pretty unusual circumstances that it's happened, given that I very rarely don't pay the full balance of my credit card and that I've just had two months with particularly large spends.

The call handler did sound surprised that I was on such a high apr, so this might be the approach I take of, I'll pay it but only at the lower interest rate that your operator said I should have been on. Ho hum.

grumbler

Sir_Robert wrote: »

....Looking in my terms and conditions, it seems that if the credit card is not paid in full, not only will interest be paid on the outstanding credit but also on the full balance of the following month.

Sir_Robert wrote: »

... according to the person I spoke to you need two clear months of full payment to 'earn' the interest-free period of 56 days.

Originally Posted by PeacefulWaters
This is normal and nothing unreasonable has been done by your card company. You should see the interest free period as a generous perk that is lost if you don't pay in full.

Deleted_User wrote: »

It's industry standard.

Well, charging interest for the next month's purchases if the previous statement was paid in full, but later, doesn't look 'reasonable' to me, and not all CCs have this "two months" stipulation in the T&C.

And no, it's not just the trailing interest that I mean that, indeed, needs two months to stop.

grumbler wrote: »

OK, Barclaycard for instance:

How we charge interest

If you pay your main balance ... due for that month in full by your payment due date, the following will apply:
• We won’t charge interest on purchases ... that have been added to your account since your last statement.
• We will only charge interest on outstanding standard balance items (including purchases)... included in your current statement balance up to the date of your current statement.

I think (not sure) two months of full payments are needed to stop trailing interest.

>> How does credit card interest work?

Ed-P

I too have a Nat West account and got caught out by the trailing interest, sadly it is just something that you have to suck up and keep in mind for the future!